The earned income tax credit (EITC) contains a substantial marriage penalty. The EITC’s current structure often results in a substantially smaller EITC when lower-income parents marry because the income from a second parent often pushes a couple above the EITC threshold for married tax filers.

To reduce this “marriage penalty,” policymakers could increase the income at which the EITC starts to phase out for married couples and phase it out more slowly. This would extend EITC benefits to married couples at higher income levels than current law, partially offsetting the existing marriage penalties for low-income families.